Emerging Climate Risks and Evolving Sustainability Strategy of Corporates by Sumit Barat

Climate change is no longer a theory but a reality. According to a report by the Ministry of Earth Sciences (MoES) published in 2020 (1), the impacts of climate change have become scientifically evident in the Indian subcontinent through a comparison of long-term climatic patterns. The report highlighted evidence of climate change in India, citing specific facts as follows:

Between 1901 and 2018, India experienced an average temperature rise of 0.7°C. It is projected that temperatures could increase by 4.4°C by the year 2100 compared to the 1976-2005 average.
The warmest day and coldest night temperatures have risen by approximately 0.63°C and 0.4°C, respectively, over the recent 30-year period (1986-2015).
Summer monsoon rainfall has decreased by 6% from 1951 to 2015.
There’s an increased frequency of localized heavy rainfall, leading to flash floods and a projected rise in daily extreme rainfall.
The frequency of severe post-monsoon cyclonic storms has significantly increased in the last two decades.
Sea levels in the Indian Ocean have risen at a rate of 1.06mm – 1.75mm per year during 1874-2004.
While central India’s humid regions have become drought-prone, coastal areas, Eastern UP, Gujarat, and major urban areas like Mumbai, Kolkata, and Chennai are becoming flood-prone.

Given these circumstances, there is a growing need for a robust regulatory framework, policy-driven mitigation measures, and voluntary initiatives to limit Greenhouse Gas (GHG) emissions. After India’s commitment to achieving Net Zero by 2070 (2), numerous companies in the country have voluntarily pledged to reduce their GHG emissions and combat climate change.

The renewable energy sector stands to gain under such circumstances since it produces energy without emitting GHGs. However, like any large-scale infrastructure, renewable power generation facilities are also susceptible to physical risks arising from climate change. Some of these risks include:

Flash floods caused by extreme rainfall leading to infrastructure damage, equipment damage, and additional capital expenditure for repairs.
Heat stress and rising temperatures lead to reduced solar photovoltaic efficiency and accelerated aging.
Changes in wind speed causing infrastructure and equipment damage, increased soiling, and structure collapse, affecting wind turbine generator productivity.
Damage to associated infrastructure during extreme weather events, leading to stranded assets and reduced productivity.

Hence, it’s crucial for renewable energy companies to incorporate climate change risk mitigation strategies at both the corporate and project levels. Employing technological solutions to address climate change risks, such as selecting module technologies with lower temperature coefficients, becomes essential.

Sustainability Strategy

The environmental impact of renewable energy systems has been a concern for decades. Several predominant environmental impacts have been identified, including:

Land use and thermal pollution
Pollutant discharge during construction
Visual impacts
Effects on natural resources

With the rapid increase in the scale of renewable energy projects in India, from kilowatts to gigawatts, emerging sustainability challenges are now being recognized. These challenges include:

Impact on natural capital: Large-scale, renewable energy installations can disrupt critical natural habitats and impact local fauna. Transmission lines (4) and wind turbines, for example, can harm avian fauna. Water usage for module cleaning affects local water resources, and improper module disposal can lead to soil contamination.
Impact on human capital: Lack of standardized human resource practices, unequal employment opportunities, and inadequate training and mentoring impact the workforce. Health and safety concerns also arise as the industry expands.
Impact on social capital: Unethical labor practices by vendors and sub-vendors, non-compliance with international guidelines, and unsustainable practices erode social capital.
Considering the cumulative impact on the Great Indian Bustard (a highly endangered avian species) from transmission lines, the Supreme Court of India ordered all transmission lines in their habitat to be moved underground (5). A number of operating/ under construction renewable energy assets fall under the purview of this judgment.
Since 2021, there have been increasing global concerns about possible human rights violations in Xinjiang province of China(6). Pursuant to this, there is an industry-wide focus on developing sustainable supply chains (10).

Considering these challenges, renewable energy companies should shift towards a holistic sustainability approach. Addressing sustainability issues at every stage of the business, from bidding to decommissioning, offers numerous benefits:

Enhanced brand image and competitive advantage
Increased productivity and reduced costs and risks
Improved compliance with regulations
Long-term operational stability
Attraction of employees and investors
Value addition to institutional and commercial customers procuring green power

The pursuit of sustainability is not just about potential benefits and risks; it is the responsible course of action. It’s time to approach sustainability holistically and integrate it into all aspects of the renewable energy business.

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